Asian markets opened broadly lower on Monday as hope for a 50bps Fed rate cut in July faded and fears of geopolitical tensions rose after Iran seized a British oil tanker in the Strait of Hormuz last week.

The S&P 500 index closed 0.62% lower to 2,976 points on Friday, with real estates (-1.69%), utilities (-1.45%) and communications (-1.32%) among the worst performing sectors. Energy (+0.49%), industrials (+0.46%) and materials (+0.25%) sectors were underpinned by higher crude oil prices.

This week, corporate earnings continue to be a focus as Amazon, Google, Unilever, Caterpillar, Coca-cola, McDonald’s and Boeing are due to release their quarterly results. This year, Corporate America is facing several headwinds including a stronger dollar, global economic slowdown, US-China trade spats and rising raw input costs. Investors are putting the impact of these factors under scrutiny for any early signs of an earnings recession.

Till now, over 80% of the S&P 500 companies have beaten analysts’ forecast, but the record rally is seemingly running out of steam. Technically, the S&P 500 index is facing strong resistance above the 3,000 points and since entered into technical correction. 10-Day SMA has turned bearish, while SuperTrend (10,3) remains upward-sloped. Once the index breaks down 2,944 point, the SuperTrend (10,3) will likely flip bearish.

In Singapore, earnings results failed to boost investors’ confidence as three out of four blue chip companies missed market expectations in 2Q. Challenging operating environment, rising operating costs and lower divestment incomes are among the common issues that Singaporean companies are facing now. Despite recent resilience in the benchmark index STI, the rally seems to be unsustainable if earnings continue to be disappointing.

SATS – SATS 1Q net profit declined 14% yoy due to higher operating cost and expenses from the consolidation of Ground Team Red (GTR) entities, the Jet Airways suspension, lower foreign exchange gains and lower cargo volumes due to global trade uncertainties. The revenue growth of 5.8% was although offset by higher expenses, driven by the consolidation of Ground Team Red (GTR) entities as well as increase in aviation catering subsidiaries in Japan and Singapore, with increasing flights handled and aviation meal volumes. Earnings per share declined 14% to 4.9 cents. The global growth slowdown is reflected in the lower cargo volume and revenue.

Keppel Corp – 2nd quarter net profit declined by 38.4% to S$ 153.4 million, despite a 17% rise in revenue year-on-year. The lower profit is mainly due to lower contributions from collective sales of development projects in its property segment. The offshore & marine segment recorded S$4 million net profit in 2Q19, compared to a net loss of S$17 million in 2Q18. Net order book also reached the highest level since 2016, suggesting the offshore & marine business is on course for a mild recovery. Earnings per share (EPS) is at S$ 0.08 for the quarter, missing analysts’ consensus of S$ 0.113.

US SPX 500 – Cash

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